MONTREAL – Gildan Activewear is facing two separate lawsuits filed in the provinces of Quebec and Ontario that could become class action suits if allowed by the courts.
The suits allege Gildan executives made millions of dollars by selling shares before news of problems at the company’s Dominican Republic plant drove the stock price down.
Metzler Investment GMBH, a German institutional investor, is the lead plaintiff in the suit filed in Ontario Superior Court. It claims to have lost $900,000 after news about the plant was released. The suit alleges Gildan CEO Glenn Chamandy and a holding company in his name made $95.2 million selling shares between Aug. 9 and Dec. 5, 2007, while CFO Laurence Sellyn allegedly pocketed $802,827 selling shares on Dec. 20 and Dec. 21.
The plaintiff argues Gildan knew or ought to have known the severity of the problems at the plant and had a responsibility to inform investors. The suit is seeking $500 million in general damages and $5 million in punitive damages.
The second lawsuit, filed in Quebec Superior Court by an individual investor, is seeking similar damages.
None of the allegations have been proven in court and Gildan said it will respond to them as required by law.
“The lawsuit is without substance or merit,” said a Gildan spokeswoman. “These kinds of things often happen when there’s a decline in stock price.”